The changes in the percentage of the gain exclusion for the sale of qualified small business stock acquired after February 17, 2009.

Small Business Stock Questionnaire
An information questionnaire, form FTB 3565, Small Business Stock Questionnaire, is included in this booklet. The purpose of this questionnaire is to provide information regarding an issuance of stock pursuant to R&TC Section 18152.5. Corporations that issue stock intended to be qualified small business stock are required to attach form FTB 3565 to Form 100. See the instructions for form FTB 3565 for more information.

Note: replaced two blank pages with FTB 3565 and Instructions on Pages 35 and 36.

Reason for the changes

AB 1412 (Stats.2013, ch. 546), signed by the Governor on October 4, 2013, retroactively allows the Qualified Small Business Stock (QSBS) deferral and 50 percent gain exclusion for tax years 2008 through 2012.

The changes in the percentage of the gain exclusion for the sale of qualified small business stock acquired after February 17, 2009, and before January 1, 2011.

Small Business Stock Questionnaire
An information questionnaire, form FTB 3565, Small Business Stock Questionnaire, is included in this booklet. The purpose of this questionnaire is to provide information regarding an issuance of stock pursuant to R&TC Section 18152.5. Corporations that issue stock intended to be qualified small business stock are required to attach form FTB 3565 to Form 100. See the instructions for form FTB 3565 for more information.

FTB 3565 and Instructions were on Pages 35 and 36.

FTB 3565, Small Business Stock Questionnaire

Revised Version

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FTB 3565 and Instructions were eliminated. In their place, we added the text below on Pages 35 and 36:
THIS PAGE INTENTIONALLY LEFT BLANK
Visit our website:
ftb.ca.gov

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Reason for the changes

The Court of Appeal’s held in Cutler v. Franchise Tax Board (2012) 208 Cal. App. 4th 1247, that the qualified small business stock exclusion and deferral statutes under California Revenue and Taxation Code (R&TC) Sections 18152.5 and 18038.5 are unconstitutional. These sections are now invalid and unenforceable.

Previous Version

18 Adjusted AMT. Enter the balance from line 17, column (c) here and on Form 100, Side 1, line 30 or Form 109, Side 1, line 13

1 Enter the AMT from the 2009 Schedule P (100), Part I, line 19. See instructions

NASSCO AMT Reduction –The Board of Equalization recently ruled in the Appeal of NASSCO Holdings, Inc 2010-SBE-001, November 17, 2010, that a corporate taxpayer may use Enterprise Zone credits and/or the Manufacturing Investment Credit (MIC) to reduce corporate alternative minimum tax (AMT). Early in 2011, the Franchise Tax Board (FTB) will post information and filing guidelines. Go to ftb.ca.gov and search for nassco for additional information.

Section C — Credits that may reduce AMT

If the corporation has AMT and remaining solar energy credit carryover or commercial solar energy credit carryover after reducing the regular tax down to the minimum franchise tax, if applicable, the corporation may reduce AMT using these credits. Corporations may also carryover to future taxable years any credits remaining after reducing the AMT to zero.

Section C Instructions

Line 16 and Line 17 – If the corporation has any of the credits listed in this section, complete column (a) through column (d) for each credit in the order listed.

Line 1– Enter the AMT from the 2009 Schedule P (100), Part I, line 19. If this amount was reduced by any commercial solar energy credit carryover or solar energy credit carryover, use the AMT from Section C, line 18 of the 2009 Schedule P (100).

18 Adjusted AMT. Enter the balance from line 17b, column (c) here and on Form 100, Side 1, line 30 or Form 109, Side 1, line 13

1 Enter the AMT from the 2009 Schedule P (100). See instructions

NASSCO AMT Reduction – The Board of Equalization recently ruled in the Appeal of NASSCO Holdings, Inc 2010-SBE-001, November 17, 2010, that a corporate taxpayer may use Enterprise Zone (EZ) credits and/or the Manufacturing Investment Credit (MIC) to reduce alternative minimum tax (AMT). For more information, see the instructions for Part II, Section C or go to ftb.ca.gov and search for nassco.

Section C — Credits that may reduce AMT

If the corporation has AMT, the corporation may reduce AMT using current EZ credit and/or remaining credit carryover from either thesolar energy, commercial solar energy, EZ hiring & sales or use tax, or MIC after reducing the regular tax down to the minimum franchise tax (if applicable). Corporations may carryover to future taxable years any credits remaining after reducing the AMT to zero.Section C InstructionsLines 16a, 16b, 17a and 17b– If the corporation has any of the credits listed in this section, complete column (a) through column (d) for each credit in the order listed.

Line 1– Enter the AMT from the 2009 Schedule P (100), Part I, line 19. If this amount was reduced by any
credits from Part II, Section C, use the AMT from Section C, line 18 of the 2009 Schedule P (100).

Reason for the changes

The Board of Equalization recently ruled in the Appeal of NASSCO Holdings, Inc 2010-SBE-001, November 17, 2010, that a corporate taxpayer may use Enterprise Zone (EZ) credits and/or the Manufacturing Investment Credit (MIC) to reduce corporate alternative minimum tax (AMT).

We revised the Schedule P (100) and instructions to: (1) allow corporate taxpayers to use the EZ credits and MIC to reduce the AMT and (2) provide instructions for corporate taxpayers to claim the above credits.

Impact

This revision will allow corporate taxpayers to use the EZ credits and MIC to reduce the AMT, which will result in a reduction to the total tax liability.